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SEPTEMBER 7, 2004
By Andy Reinhardt Nokia's Goal: Cell-Phone Planet [Page 2 of 2] CUSTOMER SELF-SERVICE. To cut the costs of building a network, Nokia has developed several technologies that reduce the number of transmission towers required, as towers are the biggest expense in a mobile network. For instance, new Adaptive Multi-Rate (AMR) encoding uses sophisticated mathematical algorithms to improve the quality of mobile signals inside buildings and at the outer edges of a cell. That can improve tower range by 30%. AMR works in conjunction with an even newer technology, Smart Radio, which pumps up the power of outgoing signals from cell towers and increases the radio sensitivity of handsets. With AMR and Smart Radio, operators can deploy up to 70% fewer cell towers, depending on geography. And to make towers even cheaper, Nokia has developed so-called "shelterless sites," which do away with the Dumpster-sized enclosures that sit next to cell towers and house the electronics connecting antennas to the network. Nokia has shrunk that gear into a box small enough to be mounted directly on the tower. Shelterless sites can cost 40% less than conventional ones. STREET-VENDOR FILL-UPS. The final frontier: cutting operating costs. Customer service alone can eat up as much as 30% of a carrier's revenues, so anything Nokia does to help carriers cut that expense helps reduce the price of mobile service. Take one of the simplest and most cost-effective examples: Nokia's "eRefills" technology, which slashes the cost of administering prepaid service and boosts usage among cash-strapped customers. Traditionally, prepaid service is sold on paper or plastic scratch-off cards in denominations from $5 to $50. But even $5 can be a lot for customers in poor countries. And printing and distributing scratch-off cards for anything less than that becomes a profit-killer. The solution? Letting customers "top up" their accounts electronically by buying airtime from authorized street vendors in increments as small as 50 cents. The eRefills technology is already being used in the Philippines, Indonesia, and India. VOICE TO TEXT. Nokia also has released cost-cutting technologies that give customers more control over their account, which means less interaction with costly service agents. For instance, it has software that lets users check on their remaining airtime balance using text messages instead of calling a support line. Nokia even has a technology for converting voicemail into multimedia text messages that are delivered directly to a person's phone for a few pennies. That means users don't have to waste expensive airtime listening to voicemail. Pushing further into the developing world is the only way Nokia can keep sales growing at the pace Wall Street is used to. But doing so exacts a toll: Because so many of the phones Nokia sells are lower-end models, its average revenue per unit is lower than that of rivals such as Samsung Group and Sony Ericsson. On the other hand, those high volumes keep Nokia's factories operating at a well-oiled pitch -- is one reason it still enjoys the highest profit margins in the business. In Nokia's case, it looks like doing good for the developing world is also pretty good business.
 Reinhardt is a Paris-based correspondent for BusinessWeek Edited by Patricia O'Connell
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